Saudi Arabia Leverages State Funds to Attract Foreign Investment

KSA, 4 November, 2024 : Saudi Arabia is actively seeking to boost foreign investment through co-investment deals with major money managers, particularly during the recent Future Investment Initiative conference, often dubbed "Davos in the desert." The Kingdom aims to attract $100 billion in annual foreign direct investment by the end of the decade, having reached approximately $25 billion last year.

Francois-Aissa Touazi, a senior managing director at French investment firm Ardian, highlighted the emerging trend of local partnerships, emphasizing the role of fund managers in adapting to this new approach. A key announcement from the conference included Canadian asset manager Brookfield launching a new $2 billion Middle East fund, which will be anchored by the Saudi Public Investment Fund (PIF) and the investment arm of the Saudi pension fund, Hassana.

The PIF also signed memoranda of understanding with Japanese financial institutions valued at up to $51 billion and is looking to establish a $1 billion fund with the Hong Kong Monetary Authority to invest in firms expanding in Saudi Arabia.

In 2023, foreign direct investment inflows amounted to 96 billion riyals ($25.6 billion), representing about 2.4% of the Kingdom's GDP. The PIF is increasingly focusing on domestic investments, reducing its international investments from 30% in 2020 to 21% last year, with plans to lower this further to 18-20%.

As the Kingdom encourages foreign companies to establish regional headquarters in Saudi Arabia to secure state contracts, firms like Alvarez & Marsal are ramping up their presence, indicating a significant shift in the business landscape.

Source : www.zawya.com